Addendum to my previous post:"2. I now can confidently say that...

Addendum to my previous post:

"2. I now can confidently say that SPS revenues are $$6.56m for Q1 and $13,448m in Q2 this year."
It should read $13.448M. If it was $13,448M, we should be around $150 per share. I can dream, and I will let you know what I have been smoking.

"3. $3.8M savings on fixed cost is actually a huge achievement because the savings flows straight down to the bottomline. It is equate to a CES revenue of $25M for 15% gross margin, or $25M Nirobox sale at 25% GM or $9.5M SUBRE sale at 40% GM. Not much comments on this savings, but I think it is BIG!"
It should be $15M.

In any case, it does demonstrate the impact of fixed cost against how much revenue a company can achieve. This leads to some reflections and probably explanation of what happened 6-7 years ago.

EMC merged with RWL when EMC's market cap was at A$280M on the back of promises of that 10,000 MABR unit order to CGGC. Lets not put any blame on the customer, nor the management at that time, just that blue sky valuations for a start-up could be in fantasyland when the investment climate allows it.

With that valuation, the merge with RWL took place where RWL injected all their operations with 7,000 reference sites in 70 countries, plus US$30M, to hold about 30% of the merged FLC. Mind you, with that many reference sites in 70 countries, it was still loss making at that time.

What took place in the subsequent 2 years, we incurred an operating expenses of about $47M and $42M. Our biggest CES project revenue of $190M with 15% GM from Ivory Coast is not even enough to cover a single year of that fixed cost! What had also happened was 2 years of write-down and impairments. Remember Baja...

It was finally addressed after 2 rounds of CR at 37c and 44c. Luckily, some progress was made in China, from of all places where many other companies had been burnt, it actually turned us around. iTest with the bulk order, plus Panjin and Yiyang came into the picture and brought in 250 plus reference sites for our MABRs. According to the media, China and SEA unit is in profitable territory.

I think currently, despite some opaqueness in contract announcements on new territories and new partners and customers, what we see is what we get.

Operating Cost has to be managed and if we are able to achieve a gross margin of 35% on revenue, and a 20% cap on operating cost as what Tom is focusing on, we should see light at the end of the tunnel when our SPS + RR revenue hits above $100M.

The merge wasn't a futile exercise though. From the merger, in addition to what EMC had started with, MABR; there is Nirobox and Niroflex; the Anaerobic Digestion operations, now waste to energy; a very robust South American operation that contributes to our results; and hopefully Recurring Revenue from O&M at Ivory coast.

Our 3 Amigos are now with us for an average of 1 over years, focusing on the biggest market. Now looking forward to them bringing in some robust results from USA.